Competition: Beaten by Price and a Damaged Plant

The one thing linking the top 10 DBS-penetrated urban/suburban counties (see chart) is that the DBS competition claims it’s beating cable on price alone. Such is the case in Loudoun County, Va., where 53.4% of TV households subscribe to DirecTV or EchoStar’s Dish Network, more than double the national average, according to Media Business Corp. "When you compare a digital package from cable with one from DBS, namely us, we come out lower [in price] and better [value]," EchoStar’s Marc Lumpkin says. "That’s the drive for customers to switch, whether the county is urban or rural." Representatives from DirecTV were unavailable for comment. In Loudoun, 25 miles northwest of Washington, D.C., EchoStar offers a digital package with more than 70 channels for $34.99 per month. Local MSO Adelphia offers a "Bronze Pak"—digital basic plus up to 80 analog basic channels—for $61.15 per month. A FAILING `A’ COUNTY Loudoun’s DBS penetration rate far exceeds similar counties in or near top U.S. cities. In TV ratings parlance, Loudoun is an "A" county. In those counties, DBS averages about 18.5% household penetration, according to MBC. Eileen McConnell, Adelphia’s GM for Northern Virginia operations, places the blame for DBS’ dominance on the PR fallout from the MSO’s bankruptcy, and on customer service problems caused by the county’s housing and office construction booms. "Contractors in those areas who put in plumbing or power or phone lines are digging up our lines and damaging them," McConnell says. "Customers don’t see that happening. They just know they don’t get pictures or sound, so they go elsewhere." Adelphia began a $2 million plant repair project last summer. The system will shift to Comcast when Adelphia’s acquisition by Comcast and Time Warner is completed. MORE SERVICES, BETTER SERVICE The plant upgrades seem to have helped. Some DBS customers are switching back to cable, McConnell says, although she did not reveal sub numbers. She shared advice for other systems getting shellacked by DBS: Offer more advanced services than the competition, promote them in as many venues as possible and focus on outstanding customer service. "We have to be out in front of our community and give them quality products and the kind of service people want so they stay with you."